SM might buy closing Lowe's

City weighing whether to buy store or let Walmart take it over

SAN MARCOS  San Marcos officials are recommending the city spend $8 million to buy and renovate a building that houses a Lowe’s home improvement store that is set to close Wednesday.

If city officials decide against buying the property, Walmart has agreed to take over the 125,000-square-foot store, just south of state Route 78 at San Marcos Boulevard.

The City Council is scheduled to vote on the purchase during a 6 p.m. Tuesday meeting at City Hall, 1 Civic Center Drive.

Lowe’s officials said they’re closing the San Marcos store because the company is opening a store in neighboring Carlsbad on Friday.

San Marcos City Manager Jack Griffin has recommended the city buy the Lowe’s building for $4.5 million, renovate it and find a new tenant. The city’s total cost, with financing, would be about $8 million.

Griffin said buying the building would be more risky than allowing Walmart to take over and would almost definitely yield less sales tax revenue. But he said it would be a more lucrative investment for San Marcos, because of a lease agreement between the city and Lowe’s that says the city can buy the property at a discount.

San Marcos owns the 266,000-square-foot Creekside Marketplace plaza where the Lowe’s operates. City officials estimate the market price for the Lowe’s building would be $8.75 million, but that Lowe’s must sell for $4.5 million.

In addition, Griffin said city officials are confident they’ll land a quality replacement for Lowe’s based on “substantive discussions with potential tenants” that the city declined to name.

The city collects $587,000 in annual lease revenue from Lowe’s, which opened in 2004. Walmart has agreed to take over those payments, Thomas Maddox, Lowe’s assistant general counsel, said in a recent letter to the city.

San Marcos could resell the building if it struggles to find tenants, Griffin said.

The new Lowe’s in Carlsbad, at Palomar Airport Road and El Camino Real, joins the chain’s other North County locations in Oceanside, Vista and Escondido.